If income earned is not accrued at the end of the accounting period,the result will be an
A)Understatement in liabilities and an overstatement in profit
B)Overstatement in liabilities and an understatement in profit
C)Overstatement in assets and profit
D)Understatement in assets and profit

Question

Quizplus · Accepted Answer

If income earned is not accrued, it means that the income has not been recorded in the financial statements. This results in an understatement of assets (since accrued income is an asset) and an understatement of profit (since the income is not recognized).

If Income Earned Is Not Accrued at the End of the Accounting